While many law firms try to ‘future proof’ themselves through strategic planning, panelists at this year's Thomson Reuters Institute Law Firm COO & CFO Forum revealed how those plans can have more immediate impact
WASHINGTON, D.C. — Whether you’re a firm, a company or just in daily life, it’s good to have a plan. The future is impossible to predict, after all, and a plan can help provide direction in uncertain times. However, is it really possible — especially in the law firm context — to “future proof” firm operations? A panel at the recent Thomson Reuters Institute’s 22nd annual Law Firm COO & CFO Forum revealed that while it’s impossible to know the future, there are ways law firms can use their strategic plans to help ensure better odds of success.
Best laid plans
At the session, David Schaefer, Co-Chief Operating Officer and Managing Director at legal consultancy Calibrate, noted that sometimes law firm strategic plans can be like New Year’s resolutions: nice platitudes, but ultimately empty. He noted that successful strategic plans have a few common elements.
First, Schaefer said, they should an actionable anchor point for the firm. When changes in law firms occur, “they’re often not anchored to their mission or values. …When things are disruptive, they can drift a little bit.”
Also, he added that strategic planning should not have a beginning and endpoint. “It’s a little bit like trying to be healthy, you have to do it all the time,” Schaefer explained, adding that law firms should thus approach strategic planning knowing that it has to happen periodically, over and over again. Otherwise, “that’s not a strategic plan. That’s just a document that people spent a lot of time and money on.”
Jeffrey Connor, Chief Financial Officer at law firm McGuire Woods, agreed, noting that many law firms need to learn how to properly evaluate those strategic plans during periodic review. “Your strategic plan should evolve, but it can also serve as a backboard to make sure things are still working,” he said.
Connor also provided two initiatives through which firms can evaluate their own strategic plans by evaluating both their highly skilled staff and their technology implementation success. For example, with business development personnel, he proposed measuring not just by RFP wins, but losses that still received positive client feedback, as well as engagements that have fully formed budget and plans, productivity, and more. Regarding technology, Connor suggested not only measuring how tech works, but also keeping track of what’s not working and being prepared to drop those tools. He also noted that when efficiencies are gained through technology, it’s important to track how attorneys are re-filling their plates.
These sorts of measurements may take more up-front thinking, but several panelists noted that these plans will not only guide firm strategy, but firm employees’ own direction as well. Kate Stonestreet, Global Chief Operating Officer at Baker McKenzie, noted that especially when measuring skilled staff, firms need clearly defined expectations of people before they can be measured. “It’s the accountability to deliver against expectations, because if you don’t know what expectations are, you’re never going to deliver against them,” said said.
New tech can still be planned for
Of course, even the best planning cannot account for every outcome. Take the emergence of a technology like generative artificial intelligence (Gen AI), for instance, which within the past year has thrown into flux everything from how associates are trained to how business development work is done throughout the firm.
Schaefer acknowledged that Gen AI has the potential to change a lot within law firms, but also noted that AI itself is not new to firms. There should be an expectation within the planning process that technology could change how firms operate, because it’s happened before. “AI is not the last stop, it’s just the next stop,” Schaefer explained. “There will be something after AI that means everybody will be telling us the legal industry is going to end.”
At Baker McKenzie, Stonestreet said her firm has adopted the “fast follower” mentality — not wanting to be too far out in front of a technology to the point at which it’s not fully developed, but able to react quickly when use cases develop. With respect to Gen AI, she has three main goals: to get data in order, train people, and make tough decisions around which technologies to purchase or wait on. Ultimately, she said, it is all done “with the view of how is it going to help us serve our clients better.”
Schaefer called familiarizing themselves with technology “an important first step for most law firms.” (That’s particularly true when undergoing data cleansing as Stonestreet suggested.) Attorneys “go to pull data and find they have five different systems that don’t talk to each other,” Schaefer said, adding that the result often is a seven-figure job for large firms to clean up that data. And while some firms may balk at having to undertake such an onerous task, even saying they believe that AI is not worth the squeeze, Schaefer countered by asking, “If not now, when?”
Indeed, the panelists all agreed that AI and other related technologies will be an important part of strategic planning moving forward, so for reticent firms, it’s important to take action now. That’s doubly true because, as Stonestreet explained, AI systems aren’t plug-and-play but instead take work to train and maintain. “Unless we can organize and maintain data,” she said, “it’s not going to deliver the value that it should.”
The looming effects of AI
Earlier in the Forum, Gretta Rusanow, Head of Advisory Services in the Law Firm Group at Citi Global Wealth, noted that law firm leaders are acutely aware of the pending impacts of Gen AI on the legal market, yet it is not something they anticipate having a dramatic impact before 2025.
However, over the next decade, more than half of respondents to a Citi survey said that they expect Gen AI will have an impact on their firm’s overall leverage model, including the potential to hire fewer junior associates and the development of new skills and roles within the firm. Accordingly, data scientists were the number one role law firm leaders anticipated needing to hire in the coming years.
While Gen AI thus far has had a relatively minimal effect on the practice of law, over the next decade, firm leaders expect widespread adoption of AI technologies to lead to increasing commoditization of certain types of legal work, with a premium being placed on higher-value strategic and advisory work.
This will also potentially change the way firms price and staff matters, as well as the amount of work clients are able to absorb in-house, Rusanow acknowledged, noting however that the full scope of the long-term effects of this new technology is difficult to discern at this point as much of the future impact of Gen AI is “too soon to tell.”
Thomson Reuters Institute’s William Josten added to this post.